Podcast

The Important Difference Between Investing vs Speculating

April 20, 2020

The road of investing is filled with good intentions and great misinformation. Brad, Ryan, and Jimmy set out to clear the air and teach the fundamentals of wealth building. Because the alternative is an aimless meandering into what most people believe to be true about asset acquisition.

The reality is investing takes on a completely different meaning depending on who you speak to. It can be incredibly dangerous when your understanding of a particular term doesn’t correlate with the path that you are on. People can waste precious time and resources on something as basic as semantics.

Brad, Ryan, and Jimmy came to realize that one of the biggest things holding people back from successfully investing for themselves was an outdated understanding of what they were attempting to accomplish. They realized that the key to empowering others was rooted in knowledge so they decided to level the playing field.

They are laying it all out on the table and getting back to basics. Stay tuned for a comprehensive guide on the vocabulary you need to know to become financially free.

Consider this the cheat sheet you never knew you needed.

Investment Terminology You Need to Know

“Investing is the fastest path to financial freedom.”- Bradley Gibb

To understand why we think it’s so important to hone in on the jargon of the financial world we first have to take a look at what traditional advice has been telling us all along. Their model insists on the saving and speculating approach.

But what happens if you do that? If you focus on just “investing” then you only lower risk and raise return. That does not lead to freedom. It’s not investing at all.

Let’s take a moment and highlight these terms for you:

What is investing?

When investing, we part with capital with the expectation that that capital is safe and it pays a regular income in either interest or dividends. Unlike traditional advice, there is no expectation that your asset will increase in value.

What is bid-ask spread?

It is what someone is willing to pay versus what someone is willing to buy it for. In trading, the goal is to connect sellers and buyers while maintaining the spread. The trader is looking to buy knowing that they’ll be able to sell for more than what they bought it for.

What is speculating?

In its simplest form, buying for use rather than for resale or income. It is parting with capital with the expectation of capital appreciation.

What is betting?

This is based on uncertainty. There is going to be either a winner or a loser and that’s determined based on the outcome. In betting, there is no involvement in the transaction. An option or push is the closest thing to betting.

“Saving and speculating is not investing.”- Jimmy Vreeland

CashFlow Tactics Approved Investing

If you want to start investing then you need to start saving. It is an essential prerequisite if you want to become financially independent. Our specific CashFlow Tactics definition of savings is liquid capital with low exposure to risk and high availability. We advise finding a place to save that at a minimum beats inflation.

“Cash in a coffee can is saving but it’s not beating inflation” – Jimmy Vreeland

We aim to store our savings in a place where we keep our liquidity without losing value. It is safe from the market and isn’t affected by market fluctuations.

Savings is the core of our wealth pyramid. It is the very first thing we start with and permits us to invest. The most dangerous thing you can do is operate your pyramid upside down where you focus on speculating, betting, and investing first.

We should always first be saving and then investing until we become financially free and finally gambling and speculating if we want to.

What They Aren’t Telling You

“The wealthy are not playing the game the way we’re told they’re playing it.” – Bradley Gibb

Most people will be surprised to find out that the wealthiest investors are not abiding by traditional financial advice. They aren’t speculating or gambling. The wealthy understand that investment terminology in a way that doesn’t allow them to make risky decisions.

So what now? We hope that once you begin to understand these definitions that you gain clarity and are better equipped to take action. It can be so easy to take action on misinformation and we want to mitigate that by offering as much detailed instruction as possible.

Want to know if you’re investing or speculating? We specifically designed a course to answer just that, head over to our FREE 5-day Cashflow Tactics Challenge. And for further resources, then we encourage you to then check out CashFlow Tactics Freedom Fast Track. It is a unique offer that consists of a carefully picked out set of resources and tools that are going to help you fast track your Financial Freedom Game Plan. Sign up today to ensure you are heading in the right direction.